Addressing the Reality of Indian Agriculture

If one casts a look at the ‘Budget at a Glance’ document in the Union Budget for 2024-25 and checks which areas have the largest allocation, an interesting story emerges. The largest expenditure is towards interest payments. Then comes transport followed by defence. In this list, agriculture is quite a few rungs behind at ₹1.52 lakh crore. But this is a deceptively small figure.

The reality is that if one adds up the fertiliser and food subsidies, the total amount that flows towards India’s rural areas adds up to a tidy pile of nearly Rs 5.21 lakh crore, a sum larger than that devoted to India’s defence. The addition of food subsidy to this figure is likely to lead to howls of protest. But that is not worth the first whimper that comes across from the nearest farm. The dirty little secret of India’s ‘food subsidy’ is that it is in effect a producer’s subsidy. A major portion of this includes the money that has to be paid to a very small fraction of well-to-do farmers in India’s northwest as minimum support prices (MSP) for wheat and rice. It is one thing to allocate Rs 60,000 crore for the PM-Kisan Samman Nidhi (PM-Kisan) for struggling farmers but something entirely different to give support to a class of rich farmers who decide to ‘protest’ at the drop of a hat.

The reality of Indian agriculture is that its share in the country’s GDP has come down from 35 per cent in 1990-91 when economic reforms were initiated to 15 per cent in 2022-23. Some part of the population involved in agriculture has declined as people have moved to other work but India still remains a country with an overwhelming number of people involved in agriculture. The result is a decline in agricultural productivity, whichever way one looks at the picture.

It is not surprising from that perspective that the emphasis of the 2024-25 Budget is on R&D and productivity in agriculture. Union Finance Minister Nirmala Sitharaman has promised a comprehensive review of the agriculture research setup. This is with a view to creating and discovering climate-resilient crop varieties, an issue that cannot be ignored any longer. She has also promised 109 high-yielding and climate-resilient crop varieties for 32 crops. These are welcome steps.

Two other features of the Budget devoted to agriculture are worth noting. One, the provision of digital public infrastructure for agriculture that includes land registries is a welcome step. Two, the announcement that a National Cooperation Policy will be issued for the all-round development of the cooperative sector is also noteworthy. Cooperatives were once a vibrant part of India’s agriculture system until they were hollowed out by rich and influential farmers in many states. The losers were poor and marginal farmers who could not join the bandwagon of the resource-intensive Green Revolution. This renewed emphasis on those aspects of agriculture that can help small farmers was much-needed. The issue of rich farmers and their blackmailing tactics still needs to be resolved.

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